The Absolute Auction and the Consignor's Son
Bluegrass Estate Partners advertised a 240-lot Lexington estate auction as 'ABSOLUTE - every lot sells to the highest bidder, no reserves, no seller bidding.' The terms page repeated the promise. Lot 118, a restored 1952 Farmall Super M tractor, drew bidder #214 to $9,200 and then bidder #377, a collector from Indiana, to $9,500. The auctioneer knocked it down to #377 and moved on. After the sale, a ringman reported that #214 is the consignor's son, who had registered online under a different surname and had also won three small lots totaling $1,340. The auctioneer had no idea at the time and had never announced that seller-connected bidding was permitted. #377 has now read about the connection in a local forum and demands to cancel the tractor purchase, and the consignor insists the sale is final and the deposit forfeited.
1. Can bidder #377 avoid the tractor sale, and what remedies are available under Kentucky's version of UCC § 2-328?
Read the worked answer
Yes, the buyer can avoid the sale, and the auctioneer should not enforce it. Kentucky's version of UCC § 2-328 (KRS 355.2-328) provides that where the seller bids, or the auctioneer knowingly receives a bid on the seller's behalf, without notice, the buyer may avoid the sale or take the goods at the last good-faith bid. The 'knowingly' element is not a safe harbor here: the auctioneer advertised an absolute sale with 'no seller bidding,' which is an express contractual promise and a representation to every bidder. The consignor's son's bid breached that term and tainted the competitive process, so #377 has a rescission claim for breach and misrepresentation even apart from the statute. Practically, offer #377 rescission with a full refund of price and premium, or, if #377 prefers, sale at the last good-faith bid before #214's $9,200 bid - the bid log will establish whether that was $9,000 or another figure. The consignor cannot insist on the deposit and also keep the sale; forfeiture is unavailable where the seller's own side caused the defect. Document the timeline and the ringman's report.
2. What must the auctioneer do about #214's winning bids on the three other lots and the consignor's demand to keep the deposit?
Read the worked answer
The other three lots are tainted too. A seller-connected buyer cannot acquire its own consignor's property in a sale the consignor controls; those sales should be unwound. The auctioneer should identify the next-highest bona fide bidder on each lot and offer the lot at that bid, or re-offer the lots, refunding #214's $1,340. No commission should be charged on any lot where the buyer was the consignor's agent or relative bidding to run the price. The deposit on the tractor should be returned as part of rescission; the consignor's demand to keep it is inconsistent with its own breach and would likely be an unfair practice. The auctioneer should also disclose the issue in writing to affected bidders and preserve the registration records showing the shared surname or address and IP data. Finally, this is a Board-reportable integrity issue: even though the auctioneer did not know at the time, continuing to defend the sale after learning the facts would convert an innocent error into a disclosure and fair-dealing violation. Consider whether the consignor's son's conduct warrants a police referral.